- The US Dollar trades positive this Thursday with many US traders at home for Thanksgiving.
- Low tradig volumes could see volatile moves if a substantial market moving headline would emerge.
- The US Dollar Index trades back above 106.00, bouncing off support.
The US Dollar (USD) trades higher in a very tight range this Thursday, with the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, bouncing back above 106.00 after a sharp sell-off the prior day, in what is expected to be a very calm remaining two trading days for the week with Thanksgiving and Black Friday taking place. Thin liquidity and most major trading floors will be closed across the United States.
Meanwhile, the focus shifts to Europe, where France is struggling to convince markets it can pass its much-needed budget after France’s Prime Minister, Michel Barnier, warned that mayhem could take place in financial markets if the French parliament does not support the budget bill with the possibility that the French government could fall, Bloomberg reports.
Daily digest market movers: Nothing to see here
- Recent European inflation figures out of Germany are confirming the possibility of a 25 basis points (bps) rate cut from the European Central Bank in its December meeting. Odds for a 50 bps rate cut have diminished to a near nil possibilty.
- The US economic calendar will be empty on Thursday and Friday due to the Thanksgiving holidays.
- Equities are trading in the green overall this Thursday. European indices are up nearly 1%, while US futures are flat to marginally higher on the day.
- The CME FedWatch Tool is pricing in another 25 basis points (bps) rate cut by the Fed at the December 18 meeting by 68.2%. A 31.8% chance is for rates to remain unchanged. The Fed Minutes have helped the rate cut odds for December to move higher.
- The US 10-year benchmark rate trades at 4.26%, and will not move this Thursday with the US bond market being closed.
US Dollar Index Technical Analysis: Concerns on France fuel the Greenback
The US Dollar Index (DXY) might be moving in the coming two days due to some outside forces. One driver could come from the Eurozone, where France’s budget hangs in the balance. Should the balance not pass Parliament, France’s yields and spreads with other European countries could get out of control and trigger uncertainty for the Eurozone and the Euro (EUR), thus making the US Dollar (USD) outperform the shared currency.
With the profit taking this week, the pivotal resistance of 107.35 (October 3, 2023, high) became active again. The fresh two-year high at 108.07 reached last Friday is the level to beat further up. A brief spike to the 109.00 big figure level could play out in a volatile moment.
The DXY is bouncing off from 105.89, a pivotal level since May 2, which was held under profit-taking pressure on Wednesday. A touch lower, the pivotal 105.53 (April 11 high) should avoid any downturns towards 104.00. Should the DXY fall all the way towards 104.00, the big figure and the 200-day Simple Moving Average at 104.02 should catch any falling knife formation.
US Dollar Index: Daily Chart
